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DGX or PNTG: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Medical - Outpatient and Home Healthcare sector might want to consider either Quest Diagnostics (DGX - Free Report) or The Pennant Group, Inc. (PNTG - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Both Quest Diagnostics and The Pennant Group, Inc. have a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
DGX currently has a forward P/E ratio of 17.71, while PNTG has a forward P/E of 36.24. We also note that DGX has a PEG ratio of 2.59. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PNTG currently has a PEG ratio of 2.79.
Another notable valuation metric for DGX is its P/B ratio of 2.56. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, PNTG has a P/B of 5.79.
These are just a few of the metrics contributing to DGX's Value grade of B and PNTG's Value grade of C.
Both DGX and PNTG are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DGX is the superior value option right now.